January 28, 2022

U.S. Cannabis Spot Index — January 28, 2022

U.S. Cannabis Spot Index — Published January 28, 2022

The U.S. Cannabis Spot Index decreased 2.3% to $1,239 per pound.

 

The simple average (non-volume weighted) price increased $6 to $1,551 per pound, with 68% of transactions (one standard deviation) in the $718 to $2,384 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.73 and the simple average price was $3.42.

 

The relative frequency of transactions for indoor product rose 2%, that for deals for greenhouse product fell 2% and outdoor transactions rose 1%.  

            

 

The relative volume of indoor flower was unchanged, while that of greenhouse flower fell 1% and outdoor flower relative volume rose 2%.  

 

U.S. Spot prices continue to spiral downward with price contagion from the largest crop, outdoor flower, spreading up to other grow types. Price contagion occurs when similar, but not necessarily identical markets are perceived to be all one market by buyers and, to some extent, sellers. In short, cannabis is all one crop, for all the differentiation between grow types. 

 

The current price contagion in cannabis markets began in earnest in the second half of 2021, as a result of significant oversupply in mature western markets. Additionally, the effective disappearance of differentiation amongst outdoor-grown product due to the emergence of single buyer type dominating the market – extractors – has played a significant role. Growing demand for extracted products has resulted in more extractors taking in more raw plant material and businesses will always seek the most efficient (least expensive) inputs to create products. From the grower perspective, increasing canopy is the immediate answer to falling prices, without regard for consumer demand. 

 

Indoor, greenhouse, and light deprivation products will likely seek higher levels of differentiation to push back against price contagion. However, the lengthy process of differentiation – the cost in time and money – likely means a small percentage will succeed in these efforts at first. Indeed, in Oregon, sources have told Cannabis Benchmarks that a small number of indoor cultivators have successfully distinguished their products and command premium prices, while the majority of growers struggle with wholesale price erosion. Ultimately, cannabis businesses that succeed in marketing themselves as different and superior will hold more value. 

 

There is a movement afoot across several states to re-examine various aspects of legal cannabis regulatory schemes. Oregon previously put in place a moratorium on cultivation licenses and Oklahoma lawmakers are exploring a moratorium on virtually all license types. In fact, Oregon may place yet another moratorium on cultivation and retail licenses in an effort to slow the significant price erosion in the state. In California, growers are seeking temporary and permanent tax relief on the state and local level with some success. All of these efforts will take time, during which price will likely continue along the path of least resistance – down. That said, efforts along these lines, and eventually full federal legalization, have the potential to reverse current price trends in the most economic way possible, by increasing demand. 

 

 

Legacy state price changes week-on-week are: Washington State, -2.1% per pound; Oregon, -3.1%; Colorado, -0.6%; and California, -5%.

 

 

February 2022 Implied Forward assessed down $25 to close at $1,275 per pound.

 

The average reported forward deal size was 59 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were unchanged at 37%, 49%, and 15% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 77 pounds, 51 pounds, and 42 pounds, respectively.

 

 

At $1,275 per pound, the February 2022 Implied Forward represents a premium of 2.9% relative to the current U.S. Spot Price of $1,239 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

California

Humboldt Revolt: Growers Seek Local Cultivation Tax Repeal

Oklahoma

Legislators Propose Two Year Cannabis License Moratorium

New York

State Projects $1.5 Billion in Cannabis Taxes Over Six Years

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

28 January 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 28, 2022 Copy

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 28, 2022
CCSI image 1 2022-01-28

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$5.07 per gram this week, up 0.4% from last week’s C$5.05 per gram. This week’s price equates to US$1,812 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

Statistics Canada recently released retail sales data for November 2021, showing nationwide legal cannabis sales began to plateau in the second half of 2021. Sales in November fell to C$353.6M. To correct for the different number of days in each month, we look at average daily sales. As seen in the chart below, November 2021 sales reached C$11.79M per day.

SOURCE: Cannabis Benchmarks, Statscan

From August 2021 to November 2021, sales were essentially flat on a daily basis, which is somewhat concerning for the cannabis industry. Previously, expanding store counts and lower retail price points resulted in more consumers moving from the illicit to the legal sales channels, but this trend seems to have been broken in much of the country in recent months. As Canada’s cannabis market matures, we may also be seeing the development of seasonality in demand, rather than the steady growth that has characterized the market’s first three years. If state-legal markets in the U.S. are any indication, the period from September through November is typically marked by slower sales, especially relative to spring and summer months, providing the possibility that more widespread growth may resume later this year.

SOURCE: Cannabis Benchmarks, Statscan
When we look at the data on the provincial level, all provinces with the exceptions of Saskatchewan and Ontario dropped in daily sales. Ontario’s growth will continue to fuel the Canadian cannabis market in 2022. As the store count in that province grows, more consumers will access cannabis through legal channels, further  driving sales. Alberta will also potentially see a growth in sales as private retailers there are expected to launch their online stores in March.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

28 January 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

January 21, 2022

U.S. Cannabis Spot Index — January 21, 2022

U.S. Cannabis Spot Index — Published January 21, 2022

The U.S. Cannabis Spot Index decreased 2.3% to $1,267 per pound.

 

The simple average (non-volume weighted) price decreased $31 to $1,545 per pound, with 68% of transactions (one standard deviation) in the $743 to $2,348 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $2.79 and the simple average price was $3.41.

 

The relative frequency of transactions for indoor product fell 2%, that for deals for greenhouse product rose 1%, as did that for trades involving outdoor flower.     

       

 

The relative volume of indoor flower fell about 2%, while that of greenhouse flower was unchanged and outdoor flower’s relative volume rose 1%.

 

Commoditized markets are those in which the product produced is deemed essentially the same no matter the producer. Commoditized agricultural products are sold in a “raw” state, unprocessed, and for immediate use by the buyer. Price differences among commoditized products tend to collapse toward the lowest price offered. 

 

One of the conditions leading toward commodification of outdoor-grown cannabis is the development of one category of buyer. That is, one type of buyer – extractors, namely – is dominating the market for outdoor flower and other plant material, buying large quantities of product they perceive to be largely interchangeable no matter the product’s origin. 

 

One need only observe the massive expansion of harvests in Oregon, where outdoor Spot is trading at under $400 per pound this week. Oregon growers harvested almost 55% more product in 2021 than in 2020. Much of that goes to extractors who buy thousands of pounds at a time for ever-lower prices, as growers look to offload much of their harvest ahead of what they have learned will be lower prices every year. 

 

 

 

As extractors come to dominate high-quantity buying of outdoor product and outdoor growers continue to expand canopy, prices among states with large outdoor harvests are going to fall toward a median. This week, outdoor flower prices in legacy states – those on the West Coast and Colorado – averaged just over $500 per pound, while ranging from just under $400 to a little over $600 per pound.

 

 

February 2022 Implied Forward assessed down $20 to $1,300 per pound.

 

The average reported forward deal size was nominally unchanged at 60 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were unchanged at 37%, 48%, and 15% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 78 pounds, 52 pounds, and 42 pounds, respectively.


At $1,300 per pound, the February 2022 Implied Forward represents a premium of 2.6% relative to the current U.S. Spot Price of $1,267 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

Michigan

December Sales Rise as Prices Fall; Combined Adult Use and Medical Sales Reach Almost $1.8B in 2021

Alaska

State Spot Price on a Tear

Nevada

October Sales Jump 11.2% MoM in Latest Report

New Mexico

Emergency Rule Change Doubles Number of Plants Allowed to Adult Use Growers

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

21 January 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 21, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 21, 2022
CCSI image 1 2022-01-21

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$5.05 per gram this week, down 0.7% from last week’s C$5.08 per gram. This week’s price equates to US$1,829 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we focus on Alberta’s potential growth in legal sales with the passing of Bill-80. Bill-80, the Red Tape Reduction Implementation Act, 2021 (No. 2) received royal assent on December 8, 2021. For the cannabis industry, this means that currently licensed retailers can establish their own online stores to sell their products direct-to-consumer. 


Up until now, legal cannabis was available online only through the Alberta Gaming, Liquor, and Cannabis (AGLC)-run e-commerce platform. AGLC will remain responsible for buying products from federally licensed producers and distributing them to licensed private retailers, but we believe the new sales landscape will be very beneficial for the entire cannabis industry and consumer.


The bill gives the province 90 days to close its online store and allow licensed retailers to set up their e-commerce platforms. So on March 8, 2022, this change will take place, likely leading to an even more competitive cannabis marketplace in Alberta.

SOURCE: Cannabis Benchmarks

Alberta has consistently had a strong store count relative to other provinces, and this has resulted in strong per capita sales figures. Our latest count shows that Alberta had 718 stores open for business as of the end of December 2021. That figure was up by 169 stores, or a jump of 30%, compared to December 2020. Licensed private retailers will be able to keep costs significantly lower with a shift to online sales. Once a customer is acquired through a storefront, moving the customer to their online platform will allow fulfillment of purchases from a centralized location, which should result in lower retail price points. This should be a net benefit to both retailers and customers. From the cultivator’s perspective, the lower retail price point will further push consumers away from the illicit markets. Alberta already has one of the smallest illicit cannabis markets, but this change should drive even more volume through legal channels.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

21 January 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

January 14, 2022

CANADA CANNABIS SPOT INDEX — January 14, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 14, 2022
CCSI image 1 2022-01-14

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$5.08 per gram this week, up 1.2% from last week’s C$5.02 per gram. This week’s price equates to US$1,834 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we review Canada’s recreational cannabis store count. The number of stores continues to climb steadily across the country, making the legal cannabis system more accessible to consumers, or in some cases increasing competition amongst retailers in more saturated local markets. 

 

Our latest count shows the number of stores open for business reached 2,967 as of the end of December. That figure is up by 1,562 stores, or a jump of  111%, compared to December 2020. As can be seen in the chart below, we expect that trend to continue throughout this year but at a slightly slower rate.

SOURCE: Cannabis Benchmarks

With each province having different licensing processes, we have seen different growth rates in the number of retailers over the past year. Some provinces still have a public ownership model for brick and mortar stores, while the provinces with the largest number of stores have typically privatized the retail sector. 

 

Ontario had always been set up for private stores, but the method of issuing licenses changed from a limited lottery system to a more open licensing process in early 2020. Subsequently, Ontario was the shining star for the cannabis space, with 1,093 new stores open during the 2021 calendar year. After the slowest initial rollout of licensed stores among all provinces, Ontario now has 1,417 stores. This figure is double that of Alberta, but there is still room to grow. Ontario’s population is 3.3 times that of Alberta, therefore we could see Ontario’s store count continue to grow to over 2,400 to have an equivalent per-capita level to Alberta.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

14 January 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved